Income Tax Act Amendment: Tax‑Exempt Overtime Premiums and Public‑Holiday Work Pay
On 21 January 2026, the National Council plenary adopted the amendment to the Income Tax Act that had been announced by the governing parties shortly before Christmas.
It provides that
- the tax exemption for overtime premiums (Section 68(2) Income Tax Act – EStG) for the 2026 calendar year is set at up to 15 overtime hours (50% premium) and
- a maximum of € 170.00 per month (Section 124b item 440 EStG); and public‑holiday work pay, which since 01.01.2025 had to be taxed following a Federal Finance Court decision, is once again tax‑exempt within the scope of Section 68(1) EStG (explicit inclusion of public‑holiday work pay in the wording of Section 68(1) EStG).
The amendment to the EStG is thus de facto settled and will enter into force retroactively as of 01.01.2026. Formally, adoption by the Federal Council (expected in the first week of February) and publication in the Federal Law Gazette (expected mid‑February) are still pending. As regards tax‑exempt overtime premiums, only as of 01.01.2027 will the originally planned permanent regime (10 overtime premiums and a maximum of € 120.00) enter into force.